Barriers to Foreign Political Cash Look Like Swiss Cheese
The Swiss billionaire Hansjörg Wyss has a profound interest in American politics. Over the years, he has pumped $475 million that he has earned manufacturing medical devices into left-wing advocacy groups – $72 million in 2021 alone, according to a new report from the conservative watchdog group Americans for Public Trust.
Although foreigners are prohibited from donating money directly to political causes, Wyss has given lavishly to progressive political organizations. Since 2016, some $245 million of his spending on American politics has gone to Arabella Advisors, which controls a vast network of progressive nonprofits that has financed hundreds of smaller groups campaigning for specific issues and candidates. Arabella raised $1.6 billion in 2021.
Critics argue that Wyss’s largesse illuminates a gaping loophole in political finance that essentially allows wealthy foreigners to launder their contributions – one exploited far more robustly by Democrats than Republicans. That may help explain why the issue became more prominent on Aug. 14, when House Republicans announced an investigation “into whether entities that qualify as tax-exempt under Section 501 of the U.S. Code are abiding by the statutory and regulatory prohibitions against … foreign sources of funding … being funneled through such organizations to influence America’s elections.”
Arabella, along with its subsidiary organizations, declined to comment for this article.
Taking foreign donations has long been illegal, but the landscape shifted in 2010 with the Supreme Court decision in Citizens United vs. FEC. By holding that campaign finance laws violated free speech, the court broadly prevented the government from restricting independent political spending by corporations and other groups. Citizens United essentially allowed Wyss and other foreign billionaires to give unlimited amounts of money to political action committees and other organizations that did not coordinate their advocacy with specific candidates.
The structure of Arabella Advisors is complicated and opaque by design. Arabella is comprised of a handful of smaller but still large and influential funds – New Venture Fund, Sixteen Thirty Fund, North Fund, Hopewell Fund, and Windward Fund. Those groups then create “pop-up” groups with generic names such as “Floridians for a Fair Shake” and “Arizonans For Responsible Government” to campaign for specific issues and candidates.
“They’re little more than websites designed to look like fully independent, grassroots advocacy groups; yet they can be unplugged the minute a campaign wraps up,” according to a recent report on Arabella’s operations by Hayden Ludwig, Director of Policy Research at the Restoration of America, a right-leaning nonprofit that investigates the undisclosed donations to nonprofits commonly disparaged as “dark money.” The groups “don’t file IRS disclosures, nor do they reveal their staff, boards, or budget. They often solicit donations from unsuspecting liberals, some of whom might be bothered to realize they’re in fact supporting the biggest ‘dark money’ monster in politics and not a grassroots group.”
With Arabella, donors’ money is extremely fungible. Because it is routed through two or three organizations before it gets spent, it is difficult to determine how donations from foreigners such as Wyss are disbursed. And given Arabella’s massive political spending, there’s no question the organization exerts political influence and is cozy with the Biden administration. This year, it was revealed that Arabella’s Eric Kessler was the only non-government employee on an email chain where Secretary of Agriculture Tom Vilsack and other USDA employees discussed policies to “transform” the U.S. food system and go after the meat industry for high prices, raising questions about whether the group is shaping the Biden administration’s agenda.
With Arabella and their foreign megadonors working this closely with the White House, “I don’t see Democrats remotely concerned about the influence of foreign money, even though they spent years hammering Trump about being a supposed Russian asset,” says Ludwig.
Two years ago, Americans for Public Trust filed a complaint with the FEC regarding Wyss and Arabella. While the FEC’s general counsel report on the matter concluded that there was “not currently enough information in the record to conclude that Wyss made indirect political contributions… that would be used for electoral purposes,” the report validated a number of concerns raised by Americans for Public Trust. Specifically, it concluded that the Sixteen Thirty Fund, a key part of Arabella Advisors network and funnel for Wyss’s money, had spent the lion’s share of its budget on electoral politics.
Ultimately, any hope for addressing foreign money in elections may lie with Congress. House Republicans recently introduced the “The American Confidence in Elections (ACE) Act,” which would make it illegal for foreigners to funnel money from nonprofits to Super PACs and other vehicles for electoral spending. And Sen. Marco Rubio reintroduced the Protecting Ballot Measures from Foreign Influence Act, which would make it illegal for a foreign national to contribute money, directly or indirectly, to state or local initiatives and referendums.
Curbing foreign influence in elections is an issue that large majorities in both parties support. “Americans of both political parties will say time and time again that they don’t want foreign money entering US elections,” says Ron Fein of clean-elections watchdog Free Speech for People. He also notes that state and local Democrats have embraced limiting foreign donations.
This article was adapted from a RealClearInvestigations article published August 22.
This article was originally published by RealClearPolicy and made available via RealClearWire.